What was the subject matter of the litigation that was stayed pending completion of litigation in the underlying bankruptcy cases of RBI and S&Q, affecting Cinnaholic?

1. Filed August 24, 2012.*

In 2012, the United States Bankruptcy Trustee sued certain of our affiliates, officers, and directors as well as other defendants. The lawsuit claims there were fraudulent transfers, constructively fraudulent transfers, and wrongful distributions made in connection with the sale of one of our affiliates, The S&Q Shack, LLC ("S&Q"), to Edmonds Capital Fund I, LLC. The lawsuit further alleged that S&Q forgave the debts some of our "affiliates" may have owed S&Q. Specifically, the Complaint alleged our officer, Daryl Dollinger and the other defendants caused or benefitted from the distribution of the entire proceeds from the sale of the S&Q assets, thereby leaving no assets available to pay S&Q's creditors nor receivables that could be collected to pay S&Q's creditors. The lawsuit further claimed Martin Sprock authorized Daryl Dollinger to make wrongful distributions of the proceeds from the S&Q sale to RBI, Mr. Sprock, and other defendants. The lawsuit sought to recover the transfers made to ten defendants, on the grounds that the defendants did not take such amounts for value or in good faith. The lawsuit also sought to make Mr. Sprock personally liable for the amount of any "excess" in the distribution made to him. The Complaint further demanded that property be turned over to the bankruptcy estate by companies with which Mr. Dollinger was formerly affiliated and the other defendants.

Mr. Dollinger and the other defendants investigated the allegations, and believed there are material inaccuracies in the Complaint and that substantial defenses existed. This adversary proceeding was stayed pending completion of litigation in the underlying bankruptcy cases of RBI and S&Q over the allowed amount of the claim of BV Retail, the sole remaining creditor in those cases. After the amount of the claim was adjudicated by the bankruptcy court, the Bankrupt Estate, the trustee, BV Retail and all of the defendants (except for Brand and Hollingsworth) successfully mediated the claims to a global resolution in November 2016. The parties subsequently executed a settlement agreement and an order approving settlement and dismissing this proceeding followed in 2017. This case and the one described below were settled jointly upon payment to debtor (through the Trustee) of the sums of $310,000 paid by Mr. Sprock and $90,000 paid by Mr. Seydel. This settlement was approved by the Bankruptcy Court and mutual general releases were entered into among all parties.

In Re: Raving Brands, Inc., Debtor through Paul H. Anderson, Jr., as Chapter 7 Trustee vs. H. Martin Sprock, III, Daryl Dollinger, Stephen LaMastra, Flying Biscuits Franchising, Inc., Monkey Joe's Franchising, LLC, Raving Brands Holdings, Inc., MH Group Holdings, LLC, Doc Green's Gourmet Salads, Inc., Doc Green's on Ponce, LLC, MSWG, LLC, Moe's SW Grill LLC, Mama Fu's Noodle House, Inc., Mama Fu's Peachtree, LLC, P.J.'s Coffee & Tea, Inc., and Bonehead's Peachtree, LLC, United States Bankruptcy Court for the Northern District of Georgia, Atlanta Division, Adversary Proceeding No. 12- 05417. Filed August 16, 2012.

In 2012 the United States Bankruptcy Trustee Daryl Dollinger, our CEO, as well as other defendants, namely FLYING BISCUIT FRANCHISING, INC., MONKEY JOE'S FRANCHISING, LLC, RAVING BRANDS HOLDINGS, INC., MH GROUP HOLDINGS, LLC, DOC GREEN'S GOURMET SALADS, INC., DOC GREEN'S ON PONCE, LLC, MSWG, LLC, MOE'S SW GRILL, LLC, MAMA FU'S NOODLE HOUSE, INC., MAMA FU'S PEACHTREE, LLC, P.J.'S COFFEE & TEA, INC., and BONEHEAD'S PEACHTREE, LLC (the "RBI Affiliates"). Count I was titled "Corporate Waste" and sought relief from certain defendants including Dollinger for their alleged failure to charge RBI Affiliates for using the Raving Brands website. Count II was titled "Unjust Enrichment" and sought relief from the RBI Affiliates for the value they obtained from use of the Raving Brands website. Count III was titled "Quantum Meruit" and sought relief from the RBI Affiliates for the value the debtor provided to them by their use of the Raving Brands website. Count IV was titled "Piercing the Corporate Veil" and sought to make Sprock personally liable as alleged 100% shareholder of debtor RBI for all debts of RBI under an abuse of entity and unity of interest theory. Count V was titled "Alter Ego" and sought to make all defendants personally liable for all debts of RBI under an abuse of entity and unity of interest theory.

Source: Item 3 — LITIGATION (FDD pages 9–11)